U.S. Sales End First-Half 2016 on Soft Note

U.S. light-vehicle sales disappointed in June, with a sluggish car sector responsible for pulling the industry well below expectations and making the odds tougher entire-2016 will outdo last year’s record 17.4 million units.

Although year-to-date volume remained above same-period 2015, the industry will be hard-pressed to match the 17.8 million-unit seasonally adjusted annual rate achieved in the second half of 2015, a pace required if the industry is to top year-ago.

A significant increase in incentives likely is needed for sales to meet the current WardsAuto forecast for the year of 17.6 million units.

Incentives appeared to be on the verge of picking up at the beginning of the month when General Motors began advertising big spiffs for its fullsize pickups following a disappointing May. However, an initial estimate from TrueCar shows incentives industrywide declined 1.0% from May, halting a 3-year trend of month-to-month increases in June.

Overall volume in June of 1.506 million units was above like-2015’s 1.471 million and took the first-half total to 8.6 million units, 1.3% above like-2015. But the daily selling rate of 57,933 over the month’s 26 days was 1.5% below year-ago’s 58,835 – 25 selling days – and the third time in the past four months that it dropped from the same year-ago period.

Furthermore, June’s SAAR of 16.6 million units was well below year-ago’s 17.0 million. The second-quarter total of 17.1 million matched April-June 2015, but made the first quarter since Q3 2011 that did not rise year-over-year.

Trucks continued to climb as deliveries increased 6.7% from year-ago and market penetration reached 60%. Trucks were led by big gains in small and premium-priced CUVs, small vans and fullsize SUVs.

A surge by the Ford F-Series (up 24.4%) and continued strength from the Ram pickup more than offset significant losses in the Large Pickup segment by GM, Nissan and Toyota. Large Pickups increased 5.5% from year-ago. The Small Pickup segment continued to soar, with sales up 26.8% from year-ago, even though the segment-leading Toyota Tacoma posted its first decline since September and only the second in the past 22 months.

Cars fell 12.1% from June 2015, with several industry leaders posting big declines including GM (down 5.1%); Ford, 15.5%; FCA, 42.5%; and Toyota, 13.9%. Even major automakers that recorded increases in cars did so based on just a few vehicles. Honda, mainly on the strength of the redesigned Civic, posted a small 0.2% gain, and Nissan, almost entirely due to Nissan Sentra and Versa small cars, was up 5.2%.

Trucks also declined for GM and Toyota in June. GM’s total sales have dropped year-over-year in five consecutive months, and Toyota has recorded four straight declines. Along with Ford, which also has lost market share this year, how these automakers react to the downturn – whether streamlining production, raising market incentives or a combination of both – could determine the year’s final outcome.

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